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Ex-Bitcoin Foundation’s Shrem Indicted After Plea Talks

April 14 (Bloomberg) -- Charlie Shrem, a prominent Bitcoin
evangelist, was indicted for allegedly trying to launder more
than $1 million in the virtual currency in a case tied to the
illicit online bazaar Silk Road.

The indictment came after plea bargaining talks with
federal prosecutors in Manhattan ended. Shrem, the former vice
chairman of the Bitcoin Foundation, and Robert Faiella, who the
U.S. said operated an underground Bitcoin exchange called
“BTCKing,” are accused of engaging in a scheme to sell
Bitcoins to users of Silk Road for illegal purchases.

Shrem, who was also the chief executive officer of a
Bitcoin exchange company called BitInstant, and Faiella were
first arrested in January and have been free on bond. They’re
charged with two counts of operating an unlicensed money
transmitting business, money laundering conspiracy and willfully
failing to file suspicious activity reports with banking
authorities, according to the April 10 indictment.

The case is the latest to be brought by Manhattan U.S.
Attorney Preet Bharara’s office stemming from a probe of Silk
Road, a sprawling and anonymous black market bazaar. Ross
William Ulbricht was charged in October with running Silk Road
under the alias “Dread Pirate Roberts,” and in December,
Bharara charged three more former Silk Road employees with
helping run the website. All have pleaded not guilty.

Shrem intends to plead not guilty to the indictment when
he’s arraigned in two weeks before U.S. District Judge Jed
Rakoff, said his lawyer, Marc Agnifilo. David Braun, a laywer
for Faiella, declined to comment about his client’s case.

Shrem and Faiella face as long as 20 years in prison if
convicted of the most serious charge of conspiracy.

The case is U.S. v. Faiella, 14-cr-00243, U.S. District
Court, Southern District of New York (Manhattan).

To contact the reporter on this story:
Patricia Hurtado in Federal Court in Manhattan at